UNIVERSITY OF NUEVA CACERES

City of Naga

JOB ORDER COSTING

PROBLEM 1.

The Alexis Company had the following inventories on August 1 of the current year:

Finished Goods Php 25,000.00

Work in Process 18,500.00
Materials 22,000.00

The work in Process account controls two jobs:

Job 401 Job 402

Materials Php 3,000.00 Php 5,600.00
Labor 2,500.00 3,000.00
Factory Overhead 2,000.00 2,400.00
Total Php 7,500.00 Php 11,000.00

The following information pertain to August operations:

 Materials purchased on account, Php 28,000.00.

 Materials issued for production, Php 25,000.00. Of this amount, Php 3,000.00 was for indirect materials;
the difference was distributed: Php 5,500 to Job 401; Php 7,000.00 to 402 and Php 9,500.00 to Job 403.
 Materials returned to the warehouse from the factory, Php 800.00, of which Php 300.00 was for indirect
materials and the balance from Job 403.
 Materials returned to vendors, Php 1,000.00.
 Payroll after deducting Php 3,025.00 for withholding taxes, Php 1,600.00 for SSS Premium, Php 375.00 for
Medicare, and Php 1,200.00 for Pag Ibig, was Php 22,800.00. The payroll due to the employees was paid
during the month. The payroll was distributed as follows: Php 10,400.00 to Job 401; Php 12,500.00 to Job
402, Php 10,500.00 to Job 403, and the balance represents indirect labor.
 The share of the employer for payroll was recorded: Php 2,000.00 for SSS Premium, Php 375.00 for
Medicare Contributions, and Php 1,200.00 for Pag Ibig funds.
 Factory overhead, other than previously mentioned, amounted to Php 15,000.00. included in this figure
were Php 3,000.00 for depreciation of factory building and equipment, and Php 950.00 for expired
insurance on the factory. The remaining overhead was unpaid at the end of August.
 Factory overhead was applied to production at the rate of 80% of direct labor cost.
 Jobs 401 and 402 were completed and transferred to Finished Goods warehouse.
 Job 401 was shipped and billed at a gross profit of 40% above cost.
 Cash collections from the accounts receivable during August was Php 35,000.00.

Requirements:
1. Journal entries to record the above transactions.
2. Job order cost sheets.
3. Cost of Goods Sold Statement
PROBLEM 2.

JAN Inc. manufactures tools to customer specifications. The following data pertain to Job 309 for February:

Direct materials used Php 4,300.00

Direct labor hours 300.00
Direct labor rate per hour Php 8.00
Machine hours used 200.00
Applied factory overhead rate/ machine Php 15.00
hour

Requirements:
1. Compute for the total manufacturing costs of Job 309.
2. Compute for the total prime cost.
3. Compute for the total conversion cost.

PROBLEM 3.

Prepare the necessary journal entries from the following information for Anderson Company, which uses a
perpetual inventory system.

a. Purchased raw materials on account, Php 56,700.00.

b. Requisitioned raw materials for production as follows: Direct materials – 80% of the purchases; indirect
materials, 15% of purchases.
c. Direct labor wages of Php 33,100.00 are accrued as are indirect labor wages of Php 12,500.00.
d. Overhead incurred and paid for is Php 66,900.00.
e. Overhead is applied to production based on 100% of direct labor cost.
f. Goods costing Php 97,600.00 were completed during the period.
g. Goods costing Php 51,320.00 were sold on account for Php 77,600.00

PROBLEM. 4.

Richards Company employs a job order costing system. Only three jobs – Job No 205, 206 and 207 were worked on
during January and February. Job No. 205 was completed February 10; the other two jobs were still in production
on February 28, the end of the company’s operating year. Job cost sheets on the three jobs follow:

Job Cost Sheet

Job 205 Job 206 Job 207
January costs incurred:
Direct material 16,500.00 9,300.00 0.00
Direct labor 13,000.00 7,000.00 0.00
Manufacturing Overhead 20,800.00 11,200.00 0.00
February costs incurred:
Direct material 0.00 8,200.00 21,300.00
Direct labor 4,000.00 6,000.00 10,000.00
Manufacturing Overhead ? ? ?

The following additional information is available:

a. Manufacturing overhead is assigned to jobs on the basis of direct labor cost.
b. Balances in the inventory accounts at January 31 were as follows:
 Raw Materials Php 40,000.00
Work in Process ?
Finished Goods 85,000.00

Required:
1. Prepare T-accounts for Raw Materials, Work in Process and Finished Goods Inventory, Manufacturing
Overhead Control. Enter the January 31 inventory balances given previously; in the case of Work in
Process inventory, compute the January 31 and enter it into the Work in Process inventory T-account.
2. Prepare the journal entries for February as follows:
 Prepare an entry to record the issue of materials into production and post the entry to the
appropriate T-accounts. (In the case of direct material, it is not necessary to make a separate
entry for each job.). Indirect materials used during February totaled Php 4,000.00
 Prepare the entry to record the incurrence of labor cost and post the entry to the
appropriate T-accounts. (In case of direct labor, it is not necessary to make a separate entry
for each job.). Indirect labor cost totaled Php 8,000.00 for February.
 Prepare an entry to record the incurrence of Php 19,000.00 in various actual manufacturing
overhead costs for February (credit Accounts Payable).
 What apparent predetermined overhead rate does the company use to assign overhead cost
to jobs? Using this rate, prepare a journal entry to record the application of overhead cost to
jobs for February (it is not necessary to make a separate entry for each job). Post this entry
to appropriate T-accounts.
 As stated earlier, Job 205 as completed during February. Prepare a journal entry to show the
transfer of this job off of the production line and into the finished good warehouse. Post the
entry to appropriate T-accounts.
 Determine the balance at February 28 in the Work in Process inventory account. How much
of this balance consists of the cost of Job 206 and 207?

PROBLEM 5.

Quest Company is a print shop that produces jobs to customer specifications. During January, Job 3051 was
worked on and the following information is available:

Direct materials used Php 2,500.00

Direct labor hours worked 15
Machine time used 6
Direct labor rate per hour Php 7.00
Overhead application rate per hour of machine time Php 18.00

What was the total cost of Job 3051 for January?

PROBLEM 6.

Cajun Company uses a job order costing. During April, the following costs appeared in the Work-in-Process
Inventory account:

Beginning balance Php 24,000.00

Direct material used 70,000.00
Direct labor incurred 60,000.00
Applied overhead 48,000.00
Cost of goods manufactured 185,000.00
Cajun Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process
at the end of April which contained Php 5,600.00 of overhead. What amount of direct materials was included in
this job?

PROBLEM 7.

Alpha Co uses a job order costing system. At the beginning of January, the company had to jobs in process with the
following costs:

Direct Material Direct Labor Overhead

Job 456 Php 3,400.00 Php 510.00 Php 255.00
Job 461 1,100.00 289.00 ?

Alpha pays its workers Php 8.50 per hour and applies overhead on a direct labor hour basis.

1. What is the overhead application rate per direct labor hour?

2. Ho much overhead as included in the cost of Job 461 at the beginning of January?
3. During January, Alpha’s employees worked on Job 649. At the end of the month, Php 714.00 overhead has
been applied to this job. Total Work in Process at the end of the month was Php 6,800.00 and all other
jobs has a total cost of Php 3,981.00. What amount of direct materials is included in Job 649?

PROBLEM 8.

Perry Company uses a job order costing system and has the following information for the first week of June:

1. Direct labor and direct materials used:

Job No. Direct Material Direct Labor Hours

498 Php 1,500.00 116
506 960.00 16
507 415.00 18
508 345.00 42
509 652.00 24
511 308.00 10
512 835.00 30
Total Php 5,015.00 256

2. The direct labor wage rate is Php 4.00 per hour.

3. The overhead rate is Php 5.00 per direct labor hour.
4. Actual overhead costs for the week, Php 1,480.00.
5. Jobs completed: Nos. 498, 506 and 509.
6. The factory had no work in process at the beginning of the week.

Required:
1. Prepare a summary that will show the total cost assigned to each job.
2. Compute the amount of overhead over- or underapplied during the week.
3. Calculate the cost of the work in process at the end of the week.
PROBLEM 9.

Aladdin Company is a manufacturing firm that uses job order costing. At the beginning of the year, the company’s
inventory were as follows:

Raw materials Php 36,000.00

Work in process 41,000.00
Finished goods 104,000.00

The company applies overhead to jobs using a predetermined overhead rate based on machine hours. At the
beginning of the year, the company estimated that it would work 21,000 machine hours and incur Php 210,000.00
in manufacturing overhead cost. The following transactions were recorded for the year:
1. Raw materials were purchased, Php 346, 000.00.
2. Raw materials were requisitioned for use in production, Php 338,000.00 (Php 302,000.00 direct and
Php 36,000.00 indirect).
3. The following employee costs were incurred: direct labor, Php 360,000.00; indirect labor, Php
68,000.00 and administrative salaries, Php 111,000.00.
4. Selling costs, Php 153,000.00.
5. Factory utility costs, Php 29,000.00.
6. Depreciation for the year was Php 102, 000.00 of which Php 93,000.00 is related to factory operations
and Php 9,000.00 is related to selling and administrative activities.
7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 19,000
machine hours.
8. The cost of goods manufactured for the year was Php 870,000.00.
9. Sales for the year totaled Php 1,221,000.00 and the costs on the job sheets pf the goods that were
sold totaled Php 855,000.00.
10. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.

Required:

Prepare journal entries. You can assume that all transactions with employees, customers and suppliers ere
conducted in cash.